Letters to Lorna

Letters to Lorna

(Filed: 22/08/2001)

Why not put our elderly first?

IN A recent article, you referred to the Royal Commission on Long Term Care, which recommended that nursing care should be provided free. The Government has not implemented the recommendations of the report on the grounds of costs.

Do you not agree with MEP Jeffrey Titford of the UK Independence Party that if we were to use the £11 billion paid each year to the EU, it would pay for long-term care for the elderly in residential homes? Do you not agree with him that charity begins at home?

Related Articles

MR TITFORD'S party is committed to pulling out of the EU. This could have consequences in terms of lost export markets that would cost us far more than the £11 billion subsidy (around £5 billion after rebates). In addition, although £11 billion might cover long-term care costs at the moment, there is every likelihood that it would very soon prove insufficient.

The real problem is that children are no longer prepared to take care of their elderly and infirm parents. Pensioners already account for 18 per cent of the UK population while taxpayers in work represent just 43 per cent, of which half account for only £12 billion of total income tax revenues of about £120 billion.

With state pensions alone costing £50 billion a year and income support to the elderly, plus housing support, costing another £15 billion or so, there is very little left to pay for nursing home fees. Those who can afford it should therefore pay for long-term care, while the tax system should support those who genuinely cannot afford to do so.

How can I best set up a trust?

FOR some time now, I have wanted to set up a trust fund for my son aged 14. There are three properties and a reasonable amount of financial assets, shares, bonds etc.

However, I am faced with acres of seemingly contradictory information about how to set up a trust. One thing is clear. It needs to be legal and done through a solicitor. Could you please advise?

E H Wright, Denville,

Havant, Hampshire

PLACING assets in a trust constitutes a disposal for capital gains tax purposes. So, if the main assets are properties, you could find yourself having to sell the shares etc to meet the CGT bill on the properties. If the assets gifted to the trust, plus other assets given away within the past seven years, exceed the nil-rate band, currently £242,000, there are also inheritance tax implications.

You clearly need professional advice. I suggest you contact the Society of Trust and Estate Practitioners on 020 7763 7152. Their members are solicitors and accountants who specialise in this tricky area of tax-planning.

Premium bonds are good fun

YOU recently compared premium bonds to the Lottery. My wife and I have both invested the maximum £20,000 in premium bonds and, since 1998, we have won a total of £5,000. This may not be the greatest of investments but, to a couple with a decent portfolio of stocks and savings, premium bonds are a great deal of fun. Any prizes are also tax-free. Please put this side of the story as well.

N Williams, Leicester

I AGREE entirely that premium bonds are a better bet than the Lottery as the chances of winning a prize of some sort are much higher - but they are still a gamble.

I know of individuals who have held the maximum number of premium bonds for longer than you and have won little or nothing. Your return of 3.12 per cent a year, tax free, is reasonable, but you would have earned more by putting the money on deposit.

Prolific Life gives you no windfalls

IN May 1993, I invested £10,000 with Prolific Life in a pension and investment bond. Scottish Provident acquired Prolific in November 1996. There is a proposal for Abbey National to transfer their assets to them in the near future. I was expecting a windfall bonus of at least £500, if not more. But I have been informed that, as I am not a member of Scottish Provident, I will receive nothing.

As you can imagine I was bitterly disappointed but, according to my policyholders' circular, this seems to be correct. Can anything be done to correct this unfair ruling? Is it worth holding on to the bond, currently worth £18,200 but as high as £19,000-plus at the start of this year?

R Oxenbury,

Exeter

I APPRECIATE your disappointment but I do not believe the situation is unfair. You have also misunderstood the situation. First, your policy is with Prolific and, although Scottish Provident acquired the company, you did not become a member of Scottish Provident. Windfall bonuses are paid to members of mutuals in return for their loss of membership.

Secondly, windfall bonuses are paid only to those policyholders who took with-profits policies - even if they did invest in a Scottish Provident policy - because only with-profits policies confer membership of a mutual on the holder.

Clearly, if your policy was at one time worth £19,000 and is now worth £18,200, you must have a unit-linked policy which would never give you membership of any mutual society. These rules are common to all companies that demutualise, not just Scottish Provident.

Valuing the furniture of an estate

I AM in the process of winding up a friend's estate of which I am executor. It is going to come well below the £242,000 threshold for IHT. Can you advise me how I put a value on her furniture and belongings, most of which will be divided amongst her grandchildren, or sold.

P Stafford,

Kings Lynn, Norfolk

A RULE of thumb is to obtain a professional valuation for any individual item which might be worth, say, £250 or more. Since the furniture may well be sold, your local auction rooms will almost certainly be able to give you a professional valuation, itemising anything worth more than £250, at little or no charge.